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Johnson Controls Dubious Information.

By Harry Welty

According to the information coming out of JCI and the Duluth School District the average Duluth household will only pay between $9 and $11 per month in property taxes if the Red Plan is adopted for a maximum of $132 annually. Let’s test this.

If you multiply $11 dollars, by 12 months and then multiply that by 20 years you get $2,240 per household. If you assume that there are 2.5 people per household this would result in $896 in taxes for the average resident of the Duluth school district over the course the Red Plan.

But if you multiply this average individual tax burden by the 94,000 residents of the Duluth School District the resultant taxes over twenty years would yield only $84,224,000 a far cry from the $437 million it will take to finance the Red Plan..

If you simply divide the $437,000,000 figure by the District’s 94,000 residents you come up with a considerably higher per person tax over twenty years - $4,649. As some wag once said, “figures never lie, liar’s figure.”

JCI has had a long history of working with school districts on issues relating to air quality and construction. It advertises itself to school districts as an expert in helping pass bond referenda. It must be very annoying for JCI to put in lots of work with a District only to see a referendum voted down. In fact, half of the Minnesota school referendums failed in 2005. It must have been tempting for JCI to search for a way around this unprofitable work and since JCI’s attorneys have so much experience with school finance law its not all that surprising that they would discover a way to avoid referenda all together.

There have certainly been many changes to state laws over the years which permit small projects to be approved by the state rather than by local voters. The question would be whether there have been enough changes to justify letting a district other than St. Paul or Minneapolis bypass referenda. St. Paul and Minneapolis , of course, have been given this authority by the legislature while Duluth has not. Johnson Controls seems to think that there has been a change in the law and now it’s up to the State Education Department to decide whether the loopholes JCI has found are big enough to authorize the state’s largest school building project without a vote. What you decide for Duluth will set a precedent for the entire state and will make the next such project all the easier to pass. That will be good news for JCI and bad news for voters.

Duluth has become the guinea pig for JCI’s novel legal interpretation. Until the advent of Let Duluth Vote JCI and the School Board only had to steer a very select group of 34 people to the Red Plan even though it is five-and-a-half times larger than any previous building proposal for the Duluth Schools. No matter which JCI plan Duluth chose, cost would not be a factor. JCI offered three plans Red, White and Blue. Each would cost over a quarter billion dollars.

Last spring JCI paid for a survey of Duluth voters (exhibit 1A). It was sixty questions long giving it the appearance of being exhaustive while in truth, it was probably only exhausting - for the people being surveyed. Most of the questions in it were of little consequence with the exception of question 26. Like a push poll question it was preceded by some information and some misinformation to make it appear that people were being asked if they minded dispensing with a referendum. The question itself was so awkwardly written that it could only be interpreted by an English teacher. It was of course the 26^th question in a survey with many more questions to follow. It is likely that most of the people being surveyed were eager to finish the survey and not inclined to give the question, poorly worded as it was, much thought. But how they answered it was very important to JCI. 

It was so important that shortly after the survey was taken it was announced that 71% of the people in Duluth were so eager to have a “long term plan” implemented that they were eager to skip a referendum.

It was so important that JCI placed the results from Question 26 into its report for review and comment no less than four times. It’s on the front page. It’s on an impressive graph on the next to last page. It’s on pages 40 and 75. It tells the State Ed Dept. that Duluth voters don’t want to vote. It is an obvious fraud by a company that didn’t quite have the confidence to believe that its unprecedented interpretation of the law would convince the State Department of Education to deny Duluth voters their right to vote.

How has JCI managed to make a $293 million building plan look so financially modest.

At the first meeting of Let Duluth Vote one of the 34 citizens on the select committee came to our meeting and explained that the cost of the Red Plan would only be $100 million dollars of bonding. We were confused by this figure, at first until it occurred to us that while the cost of bonding might only be $100 million the Red Plan would impose additional taxes for its lease levy purchasing. While JCI may not have been responsible for this bit of misinformation it dissemination didn’t speak well of the select committee that one of its members had such a poor grasp of the costs Duluth taxpayers would incur.

For its part, JCI itself was just as bad. For one thing the $9 to $11 dollar figure JCI used was based on a promise that it or the school board could not keep. JCI said that as long as some of the Red Plan costs were funneled into property tax relief the taxes would remain at this level. However, if the property taxes were not plowed into property tax relief the taxes would nearly double. This will almost certainly be the outcome in Duluth . Why?

In part it’s because voters are being denied a right to vote and will want to take their anger out on the School Board. Next year, after they open their property tax statements, they will almost certainly vote against an excess levy for operational expenses. This is all the more likely because the current school board plans to double the existing excess levy. In the face of this reality, future school boards are almost certain to make up for the loss of Duluth ’s $5 million in excess levy by replacing it with the Red Plan’s property tax reductions. This will nearly double the taxes on the Red Plan.

There’s more. JCI has explained that it has based the average tax costs on the “median” priced home in the School District . That price, according to JCI, is $125,000. This is not accurate. Duluth ’s City Assessor reported that the selling price of Duluth homes over the past three years has averaged $168,000. That is $43,000 higher than JCI’s faulty estimate.

And there’s this. (Page 79 of the Red Plan report for Comment and Review) To advertise the lowest possible tax for the Red Plan JCI back ended the taxes for the Red Plan. Next year’s Red Plan taxes will only be about one-third as much as they will be in its final year. The taxes increase at roughly 5.5 % per annum.

JCI has made a very compelling case for the Red Plan. They just haven’t made a very honest case. Even so they may have found enough loopholes to shove the Red Plan down the throats of Duluth Voters. The people of Duluth ask only that the State Department of Education remember that just because something may be legal doesn’t make it right.